How almost nine million Australians will benefit from the radical pension overhaul
The Albanian government says around nine million Australians will be better off under the super law changes. Above, Treasurer Jim Chalmers and Finance Minister Katy Gallagher
Almost nine million Australian workers will soon be better off at retirement age as the government closes a superannuation loophole.
In a move that Treasurer Jim Chalmers said would ensure millions of workers are better off, legislation will soon be introduced to make it compulsory for employers to pay the pension at the same time they pay their salary or wages from 1 July 2026.
The measures, first announced in the latest federal budget, aim to return billions in unpaid super to workers.
An estimated $3.4 billion was owed to workers in super in the 2019/20 financial year, according to the Australian Taxation Office.
“The non-payment and underpayment of Pension Guarantee contributions by employers puts the retirement incomes of millions of workers at risk,” a consultation document on the changes said.
“Due to the current design of the pension guarantee system, many pension guarantee obligations remain unpaid for long periods of time.”
Dr Chalmers and Assistant Treasurer Stephen Jones said about 8.9 million Australians would have higher retirement savings if they took their super payments earlier and more often throughout their working lives.
They said that by switching to payday super, a 25-year-old earning the average income who currently receives their super payments quarterly and wages every two weeks could be around $6,000 better off in retirement.
Australian workers are currently paid 11 per cent super, but the guarantee will rise to 12 per cent by 1 July 2025.
As it currently stands, it is illegal not to pay workers super guarantee, however, many employers only pay the pension quarterly, rather than on payday.
Currently, if employers do not pay an employee’s due entitlements by the quarterly payment date, they may be liable for the Superannuation Guarantee charge payable to the ATO.
But flaws in the current system design mean that many liabilities remain unpaid for long periods of time, causing significant problems if employers go into liquidation without paying their liabilities.
Australian workers are often paid super quarterly – rather than on the payday itself. This will change according to Albanian government laws coming in 2026
Alongside the changes to super payments, the government is also looking to strengthen the ATO to detect and recover super payments that have not been deposited into workers’ comp funds.
“The ATO has noted that businesses often enter into liquidation or insolvency before underpayment is identified, limiting its ability to carry out effective compliance activities and recover unpaid pension,” the consultation paper said.
Consultation on the proposed changes will be open for industry to suggest improvements until 3 November.
The Government is also seeking feedback on how employee choice of super funds can be improved when a worker joins a company.
Drafting of the proposed laws will take place during most of 2024, following the consultation process.
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